The CLARITY Act’s failure to advance in the U.S. Senate has shifted regulatory focus toward how crypto companies manage custody and control. A recent vote on September 15 failed to invoke cloture, falling short of the 60 votes needed to proceed. This uncertainty is now shaping product design, with experts suggesting a move toward centralized intermediaries.
The U.S. Senate’s failure to advance the CLARITY Act has pushed the debate over digital asset regulation into the realm of product design. The motion for cloture on the bill, H.R. 3633, was not agreed to on September 15, with a vote of 49-50, short of the 60 votes required.
According to Albert Castellana, CEO of GenLayer Labs, this regulatory uncertainty impacts software development. He argues that regulators should analyze whether a company has the ability to freeze assets, stop transactions, or alter terms and conditions. This distinction is critical because publishing software does not automatically mean the developer can manage user assets or operate the network.
Castellana noted that companies might adapt by using custodians or permissioned frontends, establishing a responsible party. Such decisions could alter the user experience, as the underlying blockchain protocol remains open-source, but the primary interface may require identity verification or geographical restrictions.
The House version of the CLARITY Act partially addresses this, stating that non-controlling developers who only publish software or support self-custody are not considered money transmitters. This definition hinges on a provider’s inability to unilaterally control or execute a user’s digital asset transactions.
Meanwhile, regulatory agencies are pursuing narrower initiatives. On September 17, the CFTC issued a no-action position for passive software providers, declining to recommend enforcement of certain registration requirements under specific conditions. On the same day, the SEC provided temporary and conditional relief for tokenized securities venues, allowing limited trading through permissioned market makers. Chairman Paul Atkins described this as a temporary exemption until longer-term rulemaking is completed.
Payment stablecoins, however, follow a separate path following the signing of the GENIUS Act in July 2025. Castellana stated that this means stablecoin payments do not rely on the CLARITY Act, though the issue remains for transactions in DeFi protocols and self-custodial wallets.
While the House approved H.R. 3633 in July, the possibility of another vote remains. In the meantime, businesses face two paths: agency-driven rules on specific issues or potential congressional action on broader market structure. The question remains whether the compliance process will introduce more intermediaries for blockchain users.
